Salient Features of Service Tax Circular No.108/02/2009 Dt. 29th January 2009

The Central Board of Excise and Customs (CBEC) has clarified aspects of charging service tax to buyers by the builders. ‘Service Tax’ is NOT payable to the builder by the buyer as per the Circular F.No.137/12/2006- CX.4 issued on January 29, 2009.

The buyer does not have to pay service tax to the builder/ promoter/builder as any service provided by the developer during the construction of a residential complex, before the execution of the sale deed is “self-service” and, consequently will not attract service tax.

Even when the buyer enters into a contract for construction of a residential complex for personal use with a developer/promoter/builder, who provides services such as design, planning and construction; then too such an arrangement will not invite service tax.

Builder/ promoter/builder is not a service provider and, hence is not liable to collect service tax.
Since contractors or designers are engaged by the builder and provide specific ‘service’ to him and hence “should charge” service tax to him and he is liable to pay it.

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